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Sharp’s Main Banks Said to Plan Approval of Revival Package

Sharp Corp. (6753)’s two main banks plan to back a revival package from the Japanese TV maker and will contribute to a total of about 360 billion yen ($4.6 billion) in loans, according to two people with knowledge of the matter.

Mizuho Financial Group Inc. (8411) and Mitsubishi UFJ Financial Group Inc. (8306) plan to approve the package presented yesterday by Sept. 30, the people said, asking not to be identified before an announcement. Resona Holdings Inc. (8308) and Nippon Life Insurance Co. may join in providing the loans, Kyodo News reported yesterday, without citing anyone.

Sharp, currently renegotiating a stake sale to Foxconn Technology Group, plans to cut almost 11,000 jobs by March 2014 and may sell an overseas factory, Kyodo reported today. Japan’s biggest maker of liquid-crystal displays plans to raise 213.1 billion yen from asset sales, Kyodo reported, without saying where it got the information. Miyuki Nakayama, a spokeswoman for Sharp, said a restructuring plan hasn’t been decided upon.

“It’s positive for Sharp if lenders are moving forward to make loans, as its financing issue has been a concern in the market,” said Keita Wakabayashi, a Tokyo-based analyst at Mito Securities Co. “Still, it’s hard to say whether the issue is all clear because information on how much more of the company’s debts are coming due next month and onwards isn’t public.”

Masako Shiono, a spokeswoman at Mizuho, and Hironori Imafuku, a spokesman at Mitsubishi UFJ, declined to comment.

Sharp’s Debt

Osaka-based Sharp rose 1 percent to 208 yen as of 2:31 p.m. in Tokyo. The shares have declined 69 percent this year, making it the biggest loser among more than 1,600 companies in the MSCI World Index. (MXWO)

The cost of insuring against a default on Sharp’s debt for five years rose to 2,774 basis points Tuesday morning in Tokyo, up from 2,693 in New York at Monday’s close, according to data provider CMA.

The company had 706 billion yen of short-term debt maturing within 12 months and 314 billion yen in long-term debts at the end of June, according to its latest quarterly financial statement. Sharp’s cash and near-cash stood at 218 billion yen at the time.

Return to Profit

Sharp President Takashi Okuda is cutting jobs and has put up properties as collateral to raise funds as the company projects a second consecutive annual loss. The maker of Aquos TVs has turned to lenders for financial support as commercial papers come due and after Standard & Poor’s and Moody’s Investors Service cut its credit ratings to junk.

The electronics maker has been renegotiating terms for a proposed stake sale to Taipei-based Foxconn after widening its full-year loss forecast eightfold in August, triggering a slide in its share price. Foxconn agreed in March to invest 67 billion yen for a 9.9 percent stake in Sharp at 550 yen a share.

Sharp plans to return to profit next fiscal year with the help of job cuts and cost reductions, Okuda said Sept. 14. The company is trimming its workforce and planning to reduce wages, managers’ salaries and bonuses to lower costs by 14 billion yen, it said earlier this month. The cuts are in addition to a 100 billion-yen reduction in fixed costs Sharp announced in August.

To contact the reporters on this story: Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net; Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net

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